The Work Foundation has launched a new policy prospectus today, calling for the government to construct a growth strategy based on expanding private sector jobs in all regions and countries of the UK to tackle the deficit.

Cut, Tax, Grow?, warns that until a recovery is in place, triggering big cuts in the public sector workforce would be counter-productive.

Ian Brinkley, director of the Knowledge Economy programme at The Work Foundation, says: “Much of the public debate and discussion has been on reducing the deficit through public spending cuts and tax rises. However, any successful deficit reduction strategy must encourage growth and jobs and this has so far received little attention in the public debate.

“The new government faces the challenge of tackling the UK’s very high public sector deficit while at the same time encouraging and supporting the fragile recovery by the private sector. The government must focus on growth as well as cuts.”

Brinkley warns: “Without more detail on the government’s plans for curbing public expenditure or raising taxation, it is difficult to offer an accurate assessment of likely job losses across the public sector. The government might choose pay freezes or pay cuts over redundancies for example.

“A key objective must be to grow the private sector outside the South-East. Economic activity in the UK became dangerously skewed towards excessive reliance on public sector job generation over the past decade: 70% or more of net job generation came from the public sector in much of the Midlands and North.

“This imbalance must be corrected, but at a pace and in a way that does not cripple the economic base in areas where the public sector represents the main source of high value knowledge intensive activity.”